Energy giant SSE today said it's likely to close three out of four units at its Fiddler's Ferry coal-fired plant from April 1, stoking concern that the UK's aging energy infrastructure could be left even more susceptible to future blackouts.
SSE said its 45-year old station near Manchester had been loss-making for two years and was expected to continue losing money until 2020.
It blamed "challenging economic and environmental conditions" for coal due to the UK's move towards cleaner energy. The government recently committed to close all of its coal-fired power stations by 2025, but there are rising concerns that these aren't being replaced quickly enough.
Some groups have warned this is pushing the UK towards an energy crisis. One report said coal-fired plants due to close in March mean that the 54,000 megawatts of forecast demand will not be covered by the National Grid’s output of 52,000MW.
SSE said it was consulting staff on the closure of three out of four generation units at Fiddler's Ferry but that a shutdown from April 1 was a likely outcome.
"The plant at the station is ageing, its method of generating electricity is being rendered out of date and it has been, and is expected to continue to be, loss-making," said Paul Smith, managing director of the generation business at SSE, in a statement.
Fiddler's Ferry won a 2018/19 capacity market contract for three of its units in Britain's first ever capacity market auction earlier this year. The contracts pay suppliers to keep power plants on standby so they can generate energy if production is low.
But SSE said the outlook in the power generation market had changed substantially since then, and it's projected to incur unsustainable losses even with this contract. But if SSE breaches the contract by closing the units, it will incur a £33m penalty.
Smith added: "The fact it makes more sense for SSE to contemplate making a substantial payment in lieu of the capacity agreement relating to Fiddler's Ferry in 2018/19 demonstrates just how economically challenged Fiddler's Ferry has become - its losses are unsustainable."
Last month, the company failed to gain a capacity contract for the power plant for the year 2019/20.